- Lone Pine co-CIO Kelly Granat spoke about how the firm has changed in a rare interview.
- Granat, who manages the firm with David Craver, discussed how the firm's investing practices adapted.
- It's been six years since the firm's billionaire founder, Stephen Mandel Jr., stepped down.
Evolving into Lone Pine 2.0 following billionaire founder Stephen Mandel Jr.'s retirement in 2019 has been a "heavy lift," according to the Tiger Cub's co-CIO, Kelly Granat.
Speaking on investor Patrick O'Shaughnessy's podcast in a rare interview, Granat described how the firm, which was founded in 1997, has had to change from how it invests and how it runs its business because the world looks different than it did during former President Bill Clinton's second term.
Lone Pine, which manages $18 billion and is run by Granat and fellow co-CIO David Craver, has had to focus on "shoring up the organization for a different world," she said. The changes have paid off in the last two years when the manager made 20% in 2023 and 36% in 2024 in its long-short fund — but it hasn't been painless.
Hedge funds have historically struggled with succession plans; Ray Dalio's Bridgewater churned through executives in different roles before he gave way for Nir Bar Dea, who became the firm's CEO in 2022. Industry insiders gossip over the potential successors of firms like Elliott Management and Millennium as their founders set up for the next generation but also show no signs of slowing down.
For Lone Pine, it was always understood that Mandel would eventually hand over the reins, but the manager has still dealt with outflows, a rough patch of performance, and the departure of Mala Gaonkar, one of the three people Mandel left in charge of the portfolio, in early 2022.
Granat, a former Harvard tennis player who joined Lone Pine in 2007, described the "resetting" of the portfolio following 2022 — when its long-short fund fell 38% — as necessary.
"We had lost balance in the portfolio," she said. Lone Pine focused too much on the high-growth tech names, and, in the low interest rate environment following the pandemic, there was "a lack of accountability around valuation."
Now, there's a focus on sectors they had experience in but had ignored, as well as a lower level of market exposure so the firm is more flexible.
"There are lots of ways to make money in the market, and we just got really narrow in our purview," she said.
She's proud the "breadth" of the portfolio is driving returns now — the manager made 20% in 2023 and 36% in 2024 in its long-short fund — not just a few stocks. Granat pointed out the firm didn't own Nvidia last year, for example.
The portfolio's lower exposure level is partly to respond to structural market changes, such as the growth of passive and pod investing. Granat says the tweak helps them take advantage of times when stocks move for "non-fundamental reasons," such as platforms unwinding positions or a change in which stocks are in indexes.
The firm's changes are not limited solely to its investment staff. For the first time, Lone Pine is dedicating resources toward its public appearance and outreach, she said.
"We wouldn't do things like this five or 10 years ago," Granat said about speaking on a podcast. But "the world's changed," and keeping their heads down and performing is no longer enough, even though the firm still enjoys a solid investor base of long-term investors like endowments and foundations, many of which have been with Lone Pine since inception.
The firm brought on its first-ever business development leader, Pat Cronin, in 2022, and has attended events like iConnections to connect with potential LPs, for example.
"The onus is on us to tell our story," she said. "There are other things we need to be doing to continue to develop and grow our business."
But if one thing has stayed the same at Lone Pine, Granat said, it's been the focus on the next generation. Mandel "was focused at the beginning on the firm outliving him," she said, and she and Craver, who are both in their 50s, are continuing the tradition.
"If I'm in this seat in 10 years, that's probably not the best outcome for our LPs," she said.
